Estimated cost of single-payer system in California: $400 billion a year

John SextonPosted at 5:01 pm on May 22, 2017

Progressives in California have been pushing for the state to scrap Obamacare and adopt a single-payer system similar to Canada. Today the state released an analysis of the cost of a bill currently under consideration and the result is pretty stunning. From the Sacramento Bee:

It would cost $400 billion per year to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday.

California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations committee found.

According to the LA Times, the bill under consideration would cover everyone in California including “those without legal immigration status.” Talk about a giant magnet for illegal immigration. Everyone who can cross the border and make it to San Francisco gets free health care for life. Expect to see the border crossing numbers go up near San Diego and down in Arizona and Texas if this law passes.

Where would the state come up with an extra $200 billion, which is more than the entire 2017-2018 budget? New taxes of course. The cost analysis suggests a new payroll tax of 15% would cover it. But here’s the catch. Government estimates of the cost of big new programs are notoriously bad and that’s especially the case when making a drastic change to a new system. From the LA Times:

“Therefore, there is tremendous uncertainty in how such a system would be developed, how the transition to the new system would occur, and how participants in the new system would behave,” it notes.

Just for the sake of comparison, when Californians approved a high-speed rail system in 2008, the estimated cost of the project was $40 billion. The current estimate for the same project is $64 billion and there is reason to think that figure is still well below the actual cost. In January the LA Times reported the first 118 miles of the plan was 50% over budget ($3.6 billion extra).

The same could happen with this new single-payer plan. Democrats could wipe out the old health care system only to discover the new one is going to cost $600 billion instead of $400 billion. Oops! That kind of miscalculation might even be enough to convince people to elect a few more Republicans.

This local news clip from March points out that this isn’t the first time someone has tried to push for single-payer in California.